Thomas Dunn, chairman at Orbian, discusses the profound shifts in global economic leadership and the challenges and opportunities they present for the supply chain finance industry in a world of transitions.


As is ever the case, a slow-moving trend picks up pace and seemingly accelerates into prominence as a defining theme of its time. So it has been over the last 18 months with three well-flagged transitions.

Energy transition, as global economies and politicians focus with urgency upon the necessity, challenges and opportunities of moving away from the last century’s dependence upon carbon-based energy sources.

Supply chain transition, as companies realise that the ultra-lean, marginal cost-optimised global supply chains have hit a wall of local and geopolitical challenges. These challenges are presented by both the threat of hostile foreign actors as well as the determination of national communities to arrest decades of economic ‘hollowing out’.

Capital market transition, as the Alice in Wonderland world of zero interest rates came to a shuddering halt in 2022. Every asset class is facing a painful price re-adjustment and access to capital is once more subject to a harsh light of scrutiny and real business expectations.

Each of these three transitions is operating on a different timeline. Like spheres within spheres. The energy transition is best measured in decades, the supply chain transition in years, and the capital markets transition in quarters. But, in a supercycle convergence of forces, 2023 is seeing a powerful coincidence of the three in political and policy forums.

In late April, Jake Sullivan, the US national security advisor, gave an important speech setting out key US policies. That this speech followed, and substantially fleshed out, comments that Janet Yellen, the US treasury secretary, had made only a few weeks before and that these, in turn, followed the signature Inflation Reduction Act of 2022, has given great substance to what may be the most fundamental shift in US political-economic doctrine for several decades.

The centrality of the US in the global economy is assured by the sheer scale of its activities, the further “outrageous privilege” of the ubiquitous US dollar in foreign exchange and US Treasuries as the “anchor” capital markets asset. However, Jake Sullivan’s speech does not simply rely on the importance of the US. Instead, it reflects sentiments that are becoming more common among G7 economies and beyond.

In May, Rachel Reeves of the UK’s Labour Party gave a speech in Washington that clearly applied many of the same driving principles in the formulation of their manifesto for new government. Similar messages can be seen across countries regardless of notional political orientation. A consensus is forming around certain emergent norms of political economy.

What are these key themes? More importantly for us, what challenges and opportunities do they present for the supply chain finance industry?

Four key areas may be most clearly identified:

  1. Modern industrial strategy:

For several decades, industrial strategy has been a concept that dares not speak its name, variously caricatured as Soviet-style central planning or union-captured subsidies and sclerosis. Of course, this has not stopped vast amounts of public funding being channelled into myriad sectors of every G7 economy. Such funding has, however, most typically been born of special interest lobbying and political opportunism. Very rarely has the funding been acknowledged as part of a co-ordinated effort to orchestrate success.

This is changing.

Domestic excellence, focusing on local (regional) concentrations of expertise will be an explicit goal of policy. The aim of such policy will be a reversal of key recent negative trends. Among the most important of these will be to reduce inequality and re-assert the resilience of a “social contract”. From this, it is hoped, will derive an acceleration in overall growth.

  1. Co-operation with partners:

The years from 1989 (the end of the Cold War) until 2008 (the global financial crisis) saw unprecedented growth in globalisation. It was “the end of history”: democratic capitalism had won, and now it was a land grab of global markets for both sourcing and sales. Post-GFC revealed a slowdown in this growth, but it has only been in the last three years, with Covid and then the war in Ukraine, that the latent weaknesses of the previous profligacy have been revealed.

Again, this is changing.

We do not live in a world of global interest alignment (how much easier would be the challenges of climate change if this was the case?) Rather, nations first seek to advance and protect their own interests. At times they will be “bad actors”, stealing IP, withholding key supplies, and taking businesses or personnel hostage. Believing, like Pollyanna, that “all is for the best, in the best of all possible worlds” is no longer a plan. Rather, partners need to be chosen, and subsequently managed, with far greater care.

  1. Energy transition and digital security:

Many of the themes implicit within the first two areas come together in this overarching priority.

The energy transition is not just about de-carbonisation. It is about building new expertise and industries that will transform local and national economies. In turn, these will drive productivity gains, equality gains, security and social resilience.

Digital security is not just about preventing foreign interference. It is about having secure access to key technologies (starting of course with chips, the core commodity of the 21st century), maintaining vibrant sub-sectors of innovation, and ensuring the physical security of infrastructure links (both subsea and space-based). Equally important, however, will be better management of the relationship between corporations of truly unprecedented size and influence, and the customers that they serve.

  1. Investment in emerging economies:

Again, spanning many of the themes implicit in all three of these areas, is the need for major investment in the emerging economies of Africa, Southeast Asia and South America.

These are the regions in which the fastest-growing populations require vast amounts of money for sustainable economic development. This likely runs to trillions of dollars. But these are the countries that offer many of the most compelling opportunities to address many of the other challenges:

Just as many of these regions bypassed landline telecommunications and went straight to mobile, reaping huge innovation gains, they might bypass carbon-intensive industrial development and go straight to sustainable sources, likely winning similar innovation gains.

They can be key sources of critical supplies across all of the new industrial priorities for developed countries. Likewise, they can be vibrant customer markets. Notwithstanding a status (that needs to be carefully represented) as “emerging economies”, these are often sophisticated nations that might form long-term resilient partners for the (emerging) modern industrial strategies.

Not only is there a risk of missing an opportunity, but failure to secure success with these countries also involves substantial costs. Weakened access to critical supplies, regional instabilities and ever-increasing migration challenges all loom as the consequences of failure.

Jake Sullivan’s speech has been noted as a highly consequential statement of US policy. It is being echoed across the political spectrum of the developed economies.

For the supply chain finance industry, it presents the most interesting and dynamic set of opportunities that we could hope to enjoy. It is now our responsibility to ensure that we have an industry that is fit to meet these challenges.

We have work to do on both the products that we offer as well as the structure of our organisations.